I can think of two million reasons why George Monbiot is mistaken in his claim, made on these pages on Tuesday, that "the Department for International Development is beginning to do more harm than good". That's one reason for each person in the developing world who we are helping to escape permanently from poverty every year.

DfID is regarded around the world, by both developing and developed countries alike, as one of the leaders in international development. By 2005-06, its budget - at £4.6bn per year - will be almost double what it was in 1997. By the same year, some 90% of its bilateral spending will be targeted at low-income countries. Of this rising aid budget, £1bn will be going to Africa, where the biggest challenge of lifting people out of poverty lies. One reason for that is HIV/Aids. That's why, for example, we are putting $280m (£155m) into financing the Global Fund on HIV, TB and malaria, with more to come. This includes Aids treatment. We're already the second largest bilateral donor on HIV/Aids in the world. With more money we can save more lives. In the light of the Aids crisis, for anyone to suggest that there is "too much foreign aid, rather than too little" is plain wrong.

It is, however, right to ask what foreign aid is for. As far as the UK is concerned, the answer is simple: it is about reducing poverty. That's why we passed the International Development Act, which says that Britain's aid must be spent on poverty reduction. It is now illegal for any UK development assistance to be given unless it fulfils two key conditions: firstly, that assistance is provided to further sustainable development or to improve the welfare of poor people; and secondly, that DfID is satisfied that the assistance will contribute to the reduction of poverty.

That's why DfID's work is explicitly geared towards the UN's eight millennium development goals - targets that the world has set for addressing poverty, poor health and lack of education. And that's why we "untied" our aid, so that it is no longer linked to the provision of British goods and services, and so that recipient countries can use it as they see best. We did it because it is the right thing to do, and not to comply with European competition rules, as George Monbiot alleges. There's no shortage of EU member states that have yet to follow our lead.

Our use of specialised consultancies to help deliver the aid programme is consistent with our commitment to an evidence-based approach to development work. The contractual arm of the Adam Smith Institute is just one of a vast range of external organisations that we fund or use as consultants - a range that includes universities, all of the UK's largest development NGOs, and other independent thinktanks such as the Overseas Development Institute. And like any other external consultant, ASI's contracts were awarded on the basis of value for money and rigorous testing against international competition. For example, one of the projects it is working on is the offering of assistance to Palestiniannegotiators working on the permanent status negotiations with Israel. This is hardly a case of "helping the rich while pretending to help the poor".

It is equally wrong to suggest that the aid programme is driven by a pro-privatisation agenda. Decisions about whether industries or companies should be publicly or privately owned are for the governments of developing countries to make; but where they ask for our assistance we'll give it. We want to help poor countries to invest in their priorities such as health, education or clean water. It makes no sense to spend precious resources on propping up loss-making, state-owned enterprises when they could be used to get more children into school or provide more midwives to reduce the number of mothers dying in childbirth.

In his book The Age of Consent, Monbiot wrote about the need for the global justice movement to focus on global solutions to global problems. I agree. That's why - in addition to helping poor people across the world - we're lobbying other rich countries to follow our lead.

That's also why we've been at the forefront of efforts to create a fairer trade system. It's why we are writing off 100% of the debt owed to the UK by the world's poorest countries, and why we have worked with the rest of the world on providing $70bn worth of debt through the Heavily Indebted Poor Countries initiative. And it's why we're pushing so hard for Gordon Brown's proposed International Finance Facility, a way of raising the extra $50bn a year needed to achieve the millennium development goals.

It's solutions we need. And that's what we're working with the people and governments of developing countries to try and find.